Despite the value of dynamic daily routing, many distribution-oriented companies cannot take advantage of it because of customer delivery window, driver or commercial restrictions. To optimize their delivery operations, these companies engage in strategic route design on an infrequent basis or when some big event occurs in the company. In today’s competitive market, the “5 year review” is too long and companies are bleeding profits as shifting customer bases and service policies are making existing master or static routes inefficient with inferior customer service. Technologies have also evolved to make the strategic routing process easier and more agile. It’s time to treat strategic route planning as a continuing process that keeps delivery operations running efficiently and meeting today’s higher customer service requirements.
Why Do a Delivery Network Re-route Now?
Here’s why your company needs a delivery network re-route now and an ongoing strategic routing process:
- Your customer base is changing
- Your customer service policies are changing
- Your company went through a merger
- Your company wants to know the potential impact of:
- DC location and capability changes
- Driver schedules and compensation plan changes
- New business models and delivery services
- New delivery asset options
- Potential acquisitions
- There are significant volume swings during the year
If you’re a distribution-oriented company and none of these things have happened in the last 5 years, then your business must be frozen in time – or the living dead. It doesn’t require much change to throw off a master route plan. Instead, today’s business environment shows that re-routes need to happen much more often, be part of the company’s strategy assessment process and even impact tactical and operational routing decisions. For example, companies are changing their delivery strategies based upon peak and slow seasons, or even the weather to best serve customers and keep their costs in line.
So why don’t companies perform re-routes or have strategic routing processes? For most, re-routes are a painful and time-consuming exercise. The data is a mess, they lack the skills and the tools were too complicated or worse they try to do it in a spreadsheet and struggle to get better answers than the ones they currently have.
Two Key Technology Changes
There are two key technology changes that make strategic route planning easier to execute and more dynamic.
- GPS-based mobile tracking. Yes, mobile tracking is critical to get accurate route data and know how your fleet is operating. Because of business changes your dispatchers and drivers are not executing your old master routes as planned. They are working around them and you have no idea how far off your existing plans are versus reality. GPS tracking will give you the accurate data to understand how routes are run, stop times, etc. Much of the information you need to populate a strategic route planning solution will come from the GPS data.
- Single pass optimization. Traditional optimization technology limitations forced strategic route planners to take the following 4-step approach: “cut territories,” “assign visit frequencies,” “create routes” and “review the results and make changes.” This tedious process made a strategic route planning exercise more of an art than the science it should be. This is because territory, frequency and route configuration are all interrelated. With single pass optimization, all three are considered at the same time, helping to ensure better results, reducing the complexity and skills required and shortening the planning time.
Strategic route planning can be a highly valuable process that can take costs out of the business, sets the network to better serve customers and to thoroughly understand the implications of potential changes to the distribution network before they get implemented. Rather than an approach that only uses strategic route planning occasionally, it needs to be deployed on a regular basis and as an integral part of the overall business strategy development process.
How is your company using strategic route planning? Let me know.
As Executive Vice President, Marketing and Services, Chris Jones is primarily responsible for Descartes’ marketing and professional services organizations. With over 30 years of experience in the supply chain market, Chris has held a variety of senior management positions including Senior Vice President at The Aberdeen Group’s Value Chain Research practice, Executive Vice President of Marketing and Corporate Development for SynQuest, Vice President and Research Director for Enterprise Resource Planning Solutions at The Gartner Group, and Associate Director Operations & Technology at Kraft General Foods.